Law Firms Support Change from Irish Corporation Tax to Territorial System

Ireland must quickly transform its corporate tax system into a territorial tax system to avoid being at a “major competitive disadvantage” compared to other countries, some of the biggest firms have told the government. state business lawyers.

Last year, the government launched a consultation on Ireland’s possible adoption of a territorial tax system, where corporations would only pay tax in Ireland on income and gains made in Ireland.

The Coffey Report, published in 2017, previously recommended the introduction of a double tax avoidance method in place of Ireland’s current global credit-based regime.

Law firms A&L Goodbody and Arthur Cox, as well as the Law Society of Ireland, are among those whose responses to the government consultation were published online yesterday.

“We believe change is needed to keep Ireland’s supply competitive, and the current global uncertainties make maintaining competitiveness all the more important and urgent,” A&L Goodbody said.

The firm noted that Ireland “is at a disadvantage compared to other Member States and other jurisdictions which apply a territorial tax regime”, and warned that it has “clients who suffer from double taxation due to anomalies in the credit system”.

He said the move to a territorial double tax relief system would “help to strengthen Ireland’s status as an attractive location for multinational companies to establish global and regional business or headquarters”.

Arthur Cox said: ‘Irish holding companies have already waited a long time for this scheme to be implemented and any further delay could harm Ireland’s competitiveness as a holding company location.’

The company said that holding companies “are increasingly linked to other business activities with a significant number of jobs due to substantive rules (including, more recently, the European Unshell proposal)”, and that Ireland “therefore risks losing businesses that provide jobs in Ireland if its holding company regime is not competitive with other EU and OECD countries”.

The two firms said proposed changes to Ireland’s corporate tax regime are expected to come into force by January 1, 2023.

In its brief, the Law Society said a territorial system “would be simpler in application and more in line with the tax systems of other jurisdictions, making Ireland more competitive”.